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Foreign Investment in China Falls

By

Terence Poon

Updated March 17, 2009 12:01 a.m. ET

BEIJING -- Foreign investment in China fell 16% in February from a year earlier, the fifth-straight month of declining investment, as the global downturn slows capital flows into the world's third-largest economy.

The Ministry of Commerce said direct foreign investment in February totaled $5.83 billion, bringing the total for the first two months of the year to $13.37 billion, down 26% from the same period a year earlier.

The government has been combining some economic data for January and February to avoid distortion from the timing of the Lunar New Year, which was in January this year, but in February last year.

Foreign investment in China fell 33% in January from the same month last year to $7.54 billion.

China has long been one of the world's biggest recipients of foreign investment, and while inflows haven't been huge compared with economic output, the trend has brought technology and know-how into the country. The falls in investment inflows since October have ended a long period of rapid growth in recent years, and show the global recession isn't hurting only Chinese exports.

A survey of U.S. companies in the country published last week by the American Chamber of Commerce in China found 39% of respondents are postponing or have canceled planned investments this year, while 21% expect to shrink their China work force.

Beijing has taken steps to make China more attractive to foreign investors. Last week, the Commerce Ministry said it will shift authority for approving certain foreign investments to provincial governments to facilitate investments.

Yao Jian, a Commerce Ministry spokesman, said Monday that China remains an attractive investment destination and that foreign investment is falling globally.

Foreign Investment in China Falls

BEIJING -- Foreign investment in China fell 16% in February from a year earlier, the fifth-straight month of declining investment, as the global downturn slows capital flows into the world's third-largest economy.